With employee vaccination drive on the priority, people are returning to the office during the Q2 of FY ’21.

India’s office spaces in the Q2 of 2021, with highest demand since the pandemic, is seeing a positive turn of events.

Even though several large occupiers have traded with caution because of the second, deadlier wave of COVID-19 put a halt to various expansion and renewal plans.

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Due to this same reason the employee vaccination has been the utmost priority for every organization out there post which office spaces can be used normally again by organizations of every size.

Demand for office space is projected to remain stable due to large-scale vaccines and technology-based growth plans. We expect the strong recovery to continue, and we expect demand to conclude at around 26-28 msf in 2021.

Another reason for the biggest surge of office demand ever since the pandemic began is possibly due to tenants finally moving back into pre-committed places.

With Hyderabad and Bengaluru being the top cities, they contributed to 70% of the total demand in the office spaces and the IT/ITeS sector being the 50% of the contributors to office absorption this quarter.

Large-scale tech-hiring is projected to increase as firms around the world boost their investments in technology, resulting in an even bigger share of IT/ITeS office demand in the coming quarters. On the other hand, voluntary exits across India totaled roughly 4 million square feet, with the largest concentrations in MMR, Bengaluru, and the NCR. This, together with new completions that were previously stalled owing to lockdowns, has raised vacancy by 260 basis points.

The office market saw fresh supply injection of 12.8 million square feet in Q2 CY ’21, up 45 percent from the previous quarter, with MMR and Hyderabad accounting for 59 percent of pan-India office supply.

If we talk about the demand in the office spaces across the top cities of the country, there are several pointers which the Q2 report of FY ’21 conveys,

Bengaluru

• Q2 CY ’21 demand up by 9% vs last quarter and more than thrice of Q2 CY’20 levels.
• New Completions declined by 3% vs Q1 CY ’21 but up by 338% vs last year same quarter.
• Electronic City and Nagawara emerged as top micro-markets driving 36% of office demand
• Key Demand drivers – Industrials (35%), IT/ITeS (30%)

Delhi NCR

• Demand declined by 90% vs Q1 CY’21 and vs Q2 CY’20
• New completions up by 52% vs previous quarter, and up by 25% vs Q2 CY’20 supply
• CBD Gurgaon and Suburban Noida have higher market rentals vs passing rent, indicating strong demand

Mumbai Metropolitan Region

• Demand up by 8% vs previous quarter, up by 86% vs Q4 CY’19
• Completions increased by 48% vs Q1 CY’21 and by 29% vs same quarter last year city’s demand

• Key Demand drivers – BFSI (64%), IT/ITeS (8%), Co-working (6%)

Chennai

• Demand higher by 125% vs Q1 CY’21 levels and up by 80% vs Q2 CY’21
• Supply 67% higher than Q2 CY’21 levels
• Key Demand drivers – IT/ITeS (64%), Commercial & Professional Services (30%)

Pune 

• Q2 CY’21 Demand down by 58% vs Q1 CY’21 levels and by 15% vs Q2 CY’20
• Supply declined by 55% vs previous quarter and up by 80% vs Q2 CY’20
• Top-performing macro-markets – Viman Nagar, Hadapsar & Baner – 64% of leasing
• Key Demand drivers – IT/ITeS (45%), Automobiles (11%)

Hyderabad

• Demand increased by 230% over the last quarter and by 65% vs Q2 CY’20
• Supply up by 126% vs Q1 CY’21, but down by 11% vs Q2 CY’20
• op-performing macro-market – Gachibowli – 59% of leasing activity
• Key Demand drivers – IT/ITeS (71%)

With the city wise key findings of the Q2 report of 2021, it’s safe to say that the office spaces are gaining a good momentum towards all time high since the pandemic and transitioning towards going back to pre-pandemic numbers.

Cities like Hyderabad and Bengaluru being IT/ITeS hubs, they’ll be in the front seat of bringing this change.

With vaccination drives going at an increasing pace along with the broader understanding of IT, we might see a greater movement in the Q3 of FY ‘21.

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